Way back in the 1992 presidential campaign, James
Carville coined the term "It's the Economy, Stupid."
The LNS says, "It's the Media, Stupid." Of course,
both axioms are political truths. Here is a compelling
example...Yesterday, while the increasingly unhinged
and incredibly shrinking _resident tried out his new
campaign themes "Results Matter" and "We've turned the
corner, and we are not turning back" in the state of
Misery, the US Department of Commerce released the
lastest BAD, BAD, BAD economic news safe in the
presumption that the major network news organizations
would misplace in their coverage of the Bush post-DNC
counterattack, which they dutifully did...never
mentioning the BAD, BAD, BAD economi news or the BAD,
BAD, BAD Zogby poll numbers...No CONTINUITY, no
CONTEXT...whether they are reporting on high crimes,
war crimes, treason or even political campaigns...Oh
but look, the White House also reported that the
federal DEFICIT (which the increasingly unhinged and
incredibly shrinking _resident's tax cuts created out
of the Clinton-Gore SURPLUS) will soar to $445 billion
this year...Yes, "RESULTS MATTER," but where are the
propapunditgandists now? Will they dish on it on the
Sunday morning news shows, Fork the Nation, Meat The
Press and This Week In Revision? Nah, they will stay
on message, and probably talk about how "small" a
"bounce" Kerry-Edwards will have gotten in their
cooked polls, never mentioning of course how limited,
more limited than ever before, the major network news
media coverage was...and, of course, they won't be quoting the Zogby poll numbers...
MARTIN CRUTSINGER, Associated Press: The U.S. economy
slowed dramatically in the spring to an annual growth
rate of 3 percent, as consumers, worried about higher
gasoline prices, cut back their spending to the
weakest pace in three years, the Commerce Department
reported Friday.
The April-June advance in the gross domestic product,
the country's output of goods and services, was below
the 3.8 percent increase many economists had expected
and was significantly down from a revised 4.5 percent
growth rate in the first three months of the year...
Private economists were troubled that the
second-quarter slowdown could develop into something
worse, especially if job growth fails to rebound after
a disappointing rise of just 112,000 payroll jobs in
June. The July jobs data will be released next Friday.
"All in all, the GDP was a disappointing report," said
Mark Zandi, chief economist at Economy.com. "All the
surprises were on the downside."
The weaker-than-expected GDP number gave Wall Street
more to worry about in terms of how strong the economy
will perform in the second half of this year. The Dow
Jones industrial average managed to finish the day up
a slight 10.47 points at 10,139.71, not enough to wipe
out steep losses for July.
Associated Press: This year's federal deficit will
soar to a record $445 billion, the White House
projected Friday in a report provoking immediate
election-season tussling over how well President Bush
has handled the economy...
Democrats contrasted the $445 billion projection
with the $262 billion surplus for this year that Bush
projected in 2001, when he was persuading Congress to
approve the first of his tax cuts.
The shortfall will be the third consecutive - and
ever-growing - deficit under Bush, following four
consecutive annual surpluses under President Clinton.
Democrats said the turnabout underscored the damage
done by Bush's tax cuts and his poor stewardship of
the economy, and criticized the White House praise for
the report.
Restore Fiscal Responsibility to the White House, Show
Up for Democracy in 2004: Defeat Bush (again!)
http://www.thestate.com/mld/thestate/business/9281921.htm
Posted on Fri, Jul. 30, 2004
U.S. Economy Slows Drastically in Spring
MARTIN CRUTSINGER
Associated Press
WASHINGTON - The U.S. economy slowed dramatically in
the spring to an annual growth rate of 3 percent, as
consumers, worried about higher gasoline prices, cut
back their spending to the weakest pace in three
years, the Commerce Department reported Friday.
The April-June advance in the gross domestic product,
the country's output of goods and services, was below
the 3.8 percent increase many economists had expected
and was significantly down from a revised 4.5 percent
growth rate in the first three months of the year.
The administration, counting on a rebounding economy
to bolster President Bush's re-election prospects,
insisted the second-quarter slowdown was only
temporary and forecast that growth would rebound in
the second half of the year.
Treasury Secretary John Snow noted the upward revision
of the first-quarter GDP figures with the
lower-than-expected second quarter figure. If the two
figures were averaged together, he said, it gave
evidence of an economy growing at a solid 3.75 percent
rate.
"We're on a positive track, and the fundamentals are
solid for the future," Snow said in a statement.
Private economists were troubled that the
second-quarter slowdown could develop into something
worse, especially if job growth fails to rebound after
a disappointing rise of just 112,000 payroll jobs in
June. The July jobs data will be released next Friday.
"All in all, the GDP was a disappointing report," said
Mark Zandi, chief economist at Economy.com. "All the
surprises were on the downside."
The weaker-than-expected GDP number gave Wall Street
more to worry about in terms of how strong the economy
will perform in the second half of this year. The Dow
Jones industrial average managed to finish the day up
a slight 10.47 points at 10,139.71, not enough to wipe
out steep losses for July.
The biggest drag on second quarter GDP came from
consumer spending, which rose by just 1 percent in the
second quarter, the weakest showing since a similar 1
percent rise in the second quarter of 2001, when the
economy was in recession. Consumer spending, a main
driver of the recovery, accounts for two-thirds of
American economic activity.
The weakness came from a 2.5 percent decline in
spending on big-ticket items such as automobiles.
Analysts noted, however, that auto sales, after a bad
June, have improved in July as dealers resumed
offering incentives to boost sales. Economists said
they still expect GDP growth to come in at 4 percent
or better rate in the second half of the year, which
would be strong enough to generate new jobs and
maintain the decline in unemployment.
Campaigning for a second term, Bush talks often of the
economy's creation of 1.5 million new jobs in the past
10 months. His Democratic challenger, John Kerry,
argues that this still leaves the country with 1.1
million fewer jobs than when Bush took office in
January 2001.
Kerry contends Bush is pursuing a failed economic
policy that has produced the worst jobs record of any
president since Herbert Hoover and is subjecting
Americans to a "middle-class squeeze" of falling wages
and rising costs for health care and education.
Friday's GDP report was the latest indication that the
economy, which had been racing ahead in recent months,
hit what Federal Reserve Chairman Alan Greenspan
described as a "soft patch" in June.
Sung Won Sohn, chief economist at Wells Fargo in
Minneapolis, said the problem was that many of the
factors that had provided stimuli, such as Bush's tax
cuts and low interest rates supplied by the Fed, were
beginning to wane. The Fed raised interest rates for
the first time in four years on June 30 with more rate
hikes expected in coming months.
Sohn said the GDP report provided evidence that other
sectors were beginning to take up the slack, with
business investment rising at a solid 8.9 percent
rate, propelled by a 10 percent increase in sales of
equipment and software.
Inflation remained tame in the second quarter, as
reflected by a GDP inflation gauge favored by
Greenspan: excluding energy and food, prices rose at
an annual rate of just 1.8 percent, down slightly from
a 2.1 percent increase in the first quarter.
As long as inflation is under control, Greenspan told
Congress last week, the Fed will move rates upward at
a measured pace.
The 3 percent GDP growth rate in the second quarter
was the slowest growth in more than a year, since the
economy expanded at a lackluster 1.9 percent rate in
the first quarter 2003.
Over the succeeding four quarters, the economy turned
in sizzling performances with consecutive GDP growth
rates of 4.1 percent, 7.4 percent, 4.2 percent and 4.5
percent.
The 7.4 percent rate for last year's third quarter was
revised from an original 8.2 percent. All the
quarterly GDP figures over the past three years were
revised Friday as part of the government's annual
update to reflect new source data.
ON THE NET
Commerce Department: http://www.commerce.gov/
Treasury secretary's statement:
http://www.treas.gov/press/releases/js1817.htm
Posted on Fri, Jul. 30, 2004
http://www.truthout.org/docs_04/080104Z.shtml
White House Projects Highest Deficit Ever
By The Associated Press
The New York Times
Saturday 31 July 2004
Washington - This year's federal deficit will soar
to a record $445 billion, the White House projected
Friday in a report provoking immediate election-season
tussling over how well President Bush has handled the
economy.
The administration's annual summertime budget
update forecast shortfalls falling to $331 billion
next year, then fading to $229 billion by 2009. For
each year, the red ink was smaller than the White
House envisioned six months ago.
The analysis was released the same day the
Commerce Department said economic growth slowed this
spring to an annual rate of 3 percent, well below the
3.8 percent spurt that many economists expected. The
slowdown was caused by a spending cutback by consumers
in the face of high gasoline costs, the department
said.
Administration officials hailed the budget figures
as a solid improvement over the deficits analysts
forecast early this year, and said they were on their
way to their goal of halving this year's shortfall in
five years. The White House estimated a $521 billion
budget gap for 2004 in February, while the nonpartisan
Congressional Budget Office predicted a $477 billion
deficit.
"This improved budget outlook is the direct result
of the strong economic growth the president's tax
relief has fueled," said White House budget director
Joshua Bolten.
He conceded that the red ink remained at
"unwelcome" levels, but said the report was still
"good news" because of the reduction from earlier
estimates.
Democrats contrasted the $445 billion projection
with the $262 billion surplus for this year that Bush
projected in 2001, when he was persuading Congress to
approve the first of his tax cuts.
The shortfall will be the third consecutive - and
ever-growing - deficit under Bush, following four
consecutive annual surpluses under President Clinton.
Democrats said the turnabout underscored the damage
done by Bush's tax cuts and his poor stewardship of
the economy, and criticized the White House praise for
the report.
"What we've got now is a president of the United
States who is actively misleading the American people
on the financial condition of the country," said Sen.
Kent Conrad of North Dakota, top Democrat on the
Senate Budget Committee. "Shame on him."
The White House attributed this year's improvement
to the collection of $82 billion more in revenue than
anticipated, reflecting stronger economic activity.
That was partly offset by $6 billion more in spending
than expected, largely for Medicaid and Medicare.
The projection, if accurate, would mean the
government will have to borrow 19 percent of the $2.32
trillion it expects to spend this year.
Last year's $375 billion deficit was the largest
ever. When adjusted for the loss of purchasing power
caused by inflation, only the shortfalls during World
War II have exceeded the projected $445 billion
shortfall.
The Concord Coalition and the Committee for a
Responsible Federal Budget, bipartisan groups that
advocate balanced budgets, said the report showed
deficits must be controlled.
"We cannot continue to allow this burden to
multiply for our children and our children's
children," said Maya MacGuineas, the committee's
executive director.
The White House said this year's actual deficit
could well be smaller because federal agencies often
overestimate expected spending. The government's
budget year runs through Sept. 30, so the final
figures will be in shortly before the Nov. 2
elections.
Administration officials say a $445 billion
deficit would be manageable because it would be 3.8
percent the size of the economy - well under the 6
percent ratio during the worst of the red ink under
President Reagan.
"I am pleased with the direction we are moving
in," said House Budget Committee Chairman Jim Nussle,
R-Iowa. Continuing a Republican theme, he and others
said the numbers showed spending must be constrained.
Democrats said by only extending five years, the
projections ignored the longer-term budget crisis
looming as the baby boom generation starts retiring
later this decade.
The report included the $25 billion Congress
recently approved for U.S. action in Iraq and
Afghanistan. But Democrats noted it ignored the next
request for those wars the White House will make early
next year, and the costs of easing the alternative
minimum tax's effect on middle-income families.
"There's no shock, there's no shame and there's no
solution" from the White House, said Rep. John Spratt
of South Carolina, lead House Budget Committee
Democrat.
The report also boosted the estimate of Medicare
spending by $67 billion over the next five years. It
said $26 billion was to correct costs left out of
Bush's budget last February, with the rest reflecting
new estimates for the program's spending.
Medicare, the government's health insurance
program for the elderly and disabled, spends about
$300 billion a year. It already faces questions about
its solvency because of the burden the baby boomers
will place on it, and growing medical costs.
The report was released a day after the Democratic
National Convention and the same day Congress began
hearings on the Sept. 11 commission's final report.
The deficit projection was due July 15, a date often
ignored by administrations of both parties.
Bolten said the report was not ready earlier, but
Democrats said the timing was aimed at hiding it.
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